SunPrairie Grain Morning Comment
MINOT - Jan 2/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:40 AM CDT:
Wheat is down 3-5 cents, a higher US dollar seems to be pressuring wheat prices this morning, despite thoughts that futures are oversold (Mpls March last trade 6.31, KC March 6.37)
Soybeans are 8-10 lower, South American weather has turned mostly favorable, potential for good production is high (March last trade 12.84)
Corn is 0-1 higher, despite lower wheat and bean prices corn is finding some support, possible noncommercial buying interest? (March last trade 4.22 ½)
Sunflowers are down 5-10 cents, bean oil is off with soybean meal and soybeans this morning
Canola is 20-30 cents, selling with soybean complex, canola futures market volatility is extremely high right now
Wheat and soybean futures are starting out the new year on a lower note while corn futures are working their way just slightly higher. The US dollar could be the major pressure for wheat futures this morning since it has rallied sharply higher. Crude prices are sinking down pretty heavily as well this morning, down about $1.65/barrel at the moment. Corn prices seem resilient to lower wheat and soybean prices, up about two cents/bushel.
Futures markets for wheat are really starting to feel pretty heavily oversold. Even so, there is virtually no buying interest commercial or otherwise that wants to help give futures a boost. So are wheat prices due for an upward correction? Probably. How much lower do they have to go before they get that correction? Only time will tell. A sharply higher US dollar combined with ample global supply is enough to keep things headed downward. Only adding to the global supply situation are reports of the Chinese winter wheat crop getting off to a good start.
South American rains providing relief to some dry areas combined with a what looks to be a large soybean harvest looming over the horizon is enough to scare US soybean prices into trading lower. There is chatter about large yield potential in Brazil due to a good growing season. We're still awhile away from harvest (about two months) but the market is always extremely focused on South American production potential at this time of year. Once South American harvest starts and becomes old news the market attention will then shift to US planting and potential for increases in acres as farmers switch from corn to beans due to more attractive prices. If you're planning on growing soybeans this year and are comfortable doing so I suggest locking in some new crop prices. IF South America has record production and IF the US increases acres this year, soybean prices will fall before harvest in October. Now that's a lot of "ifs" and we're a long way from harvest, I realize that. However, we have to make decisions based on information available which currently says that soybeans have more potential of falling by October than rising. Ok I'll get off my soapbox now :)
The corn market does not have any real fundamental reason for trading higher this morning, but is doing so anyway and gaining strength as we work our way through the morning. Export demand is shaky at best after Chinese rejections of US corn and DDG cargoes. Unstable export demand combined with an already large US carryout has prices on edge this morning. It seems that today's strength is probably coming from noncommercial market participants who are buying up some of their short (sold) positions.
I hope you all had a wonderful holiday season filled with friends and family!
Kayla Burkhart
Broker/Procurement
SunPrairie Grain
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1800 13th St SE | Minot, ND 58701
P 701.857.9322 | F 701.839.5515 | C 701.720.4682
kayla.burkhart
To discuss this report further or for specific trade ideas please contact me
directly
Kayla Hoffman
SunPrairie Grain
Kayla.Hoffman@chsinc.com
Toll free: 800.735.4956
Local: 701.852.1429
Fax: 701.839.5515
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